According to the Budget Overview for 2017, the shared budget of the Schools of Art and Sciences and Engineering (AS&E) must pay off $10 million in outstanding debt this year as part of its annual payment of debt and interest against a total of $161 million in outstanding debt. This has been issued to the school over time to support the construction of new buildings, such as the Collaborative Learning and Innovation Complex (CLIC) and the Science and Engineering Complex (SEC), as well as the upkeep to existing facilities.
According to the Overview, the building of the CLIC and SEC in particular has increased annual debt payments by $7 million in the past three years.
Patrick Collins, executive director of public relations for the university, said the current debt situation does not qualify as a deficit, which the university has not seen for at least 30 years.
“There have been times when, early in a particular year or mid-year, a deficit might have been projected, but steps were taken to address it. That scenario, similar to this year, is not unprecedented,” Collins told the Daily in an email.
According to Vice President for Finance and Treasurer Tom McGurty and Dean of the School of Arts & Sciences James Glaser, the current pressure on the Arts and Sciences budget is not the result of poor planning, but rather the product of the viable assumptions made in years past not entirely playing out as expected.
“There were a variety of strategies that were identified that would allow us to absorb those costs in the budget… We were unable to realize them… Basically, we were looking at growth in graduate enrollment — that did not occur,” McGurty said.
Capital and Operating Budgets
The university-wide budget is divided into two parts, the Overview explains, a capital budget and an operating budget. According to the Overview, the capital budget typically covers assets such as IT systems, equipment acquisition, construction and maintenance of facilities, for example, the CLIC and SEC, which often require additional loans and explain the large jump in recent debt. These types of expenditures are typically planned for several years in advance, said McGurty.
While the construction cost for buildings like the CLIC and the SEC are over with the end of construction, the overhead costs of the buildings once in use increase the operating budget, McGurty said.
However, there have been other unexpected changes to the operating budget, according to Glaser.
The operating budget covers “all of the revenue and expenses associated with the operations of all the schools at the university,” according to the Overview. Expenditures include supplies, equipment, travel, service contracts, utilities, maintenance and renovation costs for facilities, IT systems and equipment, according to the overview. The largest operating expense are the salaries, wages and benefits of faculty, staff and student employees.
According to the Overview, student tuition and fees paid to the school makes up 73 percent of the AS&E operating revenues. This past year, not only did the tuition rate not increase as much as expected, but there was also an unanticipated decrease in the number of returning students, as much as four or five percent, Glaser estimated, which had a magnifying effect on budget strains.
Glaser also pointed to union contracts which increased benefits for employees, which were not factored into initial budget calculations.
“We’ve had union contracts that have happened in the past couple of years that, when we made the [initial] assessment … weren’t even a sparkle in anybody’s eye,” Glaser said. “The tuition has not gone up to the same degree that we expected it to.”
McGurty added that increased costs in the financial aid awarded for Master’s programs and administrative inefficiencies also contributed to a budget burden.
Moreover, the acquisition of the School of the Museum of Fine Arts (SMFA) has yielded additional financial challenges for the school, although McGurty explained that the university’s projections of the costs associated with the SMFA had been accurate. Though they knew the SMFA would have a deficit in the several years following the acquisition, this year’s enrollment statistics were below what was anticipated, he said.
“I think that these are sort of growing pains,” McGurty said, referring to the SMFA acquisition. “As we’ve taken on the school, there is continuously a lot of confidence that there is an ability to realize those enrollments long term. But it was primarily a problem on the enrollment side, when we just didn’t meet our targets.”
Glaser also said there had been a lack of applications to the SMFA, but the university could increase its marketing of the school to increase enrollment.
“If we build applications, we are confident we will build the enrollment there,” Glaser said. “The challenge is getting the word out that the museum school is under new management and that it’s going to be a fantastic place where you will get a high-quality art degree but also have access to a first-class undergraduate education… But we do have a challenge to make it work.”
Specifically, Glaser pointed to providing easy and direct transportation, more access to food and adequate residence halls as the primary tasks that came with integrating the SMFA. Glaser explained that food options have been made more available to students by creating a café within the SMFA building itself, while the school has managed to provide residence hall options to house students in their first and second years — in fact, he mentioned that the vacancies in the residence halls were indicative of the need for efforts by the university to increase enrollment. Transportation, in Glaser’s view, is the most salient item to address with the SMFA, as the bridges en route to Storrow Drive, where the school is located, are too close to the ground for the buses to safely clear.
A recent change in the endowment spending policy by the Board of Trustees puts additional strain on the budget, McGurty said. The annual rate of spending from the endowment has been lowered half a percent, he said. The endowment is a fund of donated money that has strict spending regulations and accounts for eight percent of the AS&E budget, according to the Overview.
Over the course of the next five years, McGurty explained, the maximum spending rate from the endowment should level off somewhere between 3.5-4.5 percent. Notably, the $452 million endowment for AS&E is lower per student than the ratios at comparable peer institutions, according to the Overview.
Glaser said limiting spending from the endowment can lower costs in the long term, because it gives the endowment the potential to grow more.
Glaser added that Tufts is currently administering a capital campaign that will hopefully increase the endowment’s size. The Brighter World campaign started in 2013 and launched its public phase in November; it has already raised more than $566 million in its quiet phase with a goal of reaching $1.5 billion.
Addressing Budget Transparency
Tufts Community Union (TCU) Senator Jamie Neikrie, a senior and chair of the Administration & Policy Committee, has the broad charge of looking at large scale projects that fall at the nexus of student life and administration.
One of Neikrie’s major priorities over his past few semesters on Senate is demystifying information about the budget and much of his committee’s efforts have culminated in today’s town hall between members of the administration and students, focused on budget transparency.
“I started on TCU Senate last year, and the thing that I wanted to do was to get an itemized budget released,” Neikrie said. “We have very general budgets that say how much money each school gets… But unless you look at the tax returns and can understand the tax returns … it is pretty hard to tell where any money is going.”
Neikrie further emphasized that the town hall signifies a good faith effort on the part of the university to clear up any questions and concerns that students may have.
He believes that greater transparency is not only in the best interest of the student body, who would be able to see where resources are being funneled, but also a constructive move on the administrative end, as students could theoretically look at the exact distribution of university funds and financial limitations and make more reasonable financial demands on the university.
“If students aren’t made aware of the fact that there is a deficit and think there is an unlimited amount of money … the heads of the departments have to have that conversation [about why the department is unable to afford certain things] without being clear with students,” Neikrie said.
Neikrie lamented that there has not been as much awareness among the student body surrounding the budget deficit. Neikrie mentioned that he and TCU Vice President and senior Anna Del Castillo met with the administration several weeks ago. Neikrie said he felt the administrators were direct and clear about the budget deficit in this conversation. Still, he qualifies that it would have been better to engage in the dialogue about financial limitations earlier.
“I think they just wanted to control how this narrative got out. I’m not going to say that they were being transparent… Telling people now is not as helpful as it would have been [to talk about this earlier,]” Neikrie said.
Glaser, on the other hand, said that the ever-changing nature of financial circumstances and resulting administration reactions are not necessarily of pressing interest to the majority of students.
“From my perspective as dean, circumstances change on a weekly, monthly basis, and we did know that there were big, big bills coming due, and we’ve tried our best to … address them,” Glaser said. “We didn’t address them enough. We did do things to anticipate this, but … circumstances change, and we are responding to those changes, and the student body doesn’t want to know about every one of these changes.”
The breadth and depth of these savings measures and how they will impact the day-to-day operations of students, staff and faculty have yet to be seen. However, the school is considering a myriad of approaches according to McGurty.
In a joint statement to the Daily, McGurty and Glaser also stated that the university was postponing giving offers to non-essential new hires.
“We are looking at every vacancy that becomes available and looking to consider whether or not we need to fill that right away or fill that at all,” McGurty said. “Those kinds of examinations are happening real time, and there is an opportunity to save some money there, which is obviously something we are trying to pursue.”
In terms of expanding enrollment, McGurty clarified that there is no definitive decision to increase enrollment on the Medford/Somerville campus, but explained that increasing the student-body size is something that is being studied, as the school works to gauge what the school’s capacity is and what the cost of increasing enrollment would be.
However, Glaser explained that both in the realms of staff and faculty hires and student enrollment, the administration is scrutinizing the capacity and organization of the university to see what options are feasible moving forward.
“You can’t [just] bring more students on board… You have to have the ability to serve them,” Glaser said. “Whether everybody is in the right position to serve them is a question, and we have to make smart decisions about who is here, and we will be making those decisions.”
Still, Glaser remains confident that the school’s financial situation will be under control.
“[There are] big ticket items that we’ve had to absorb into the budget, and we will absorb them into the budget, I am very confident about that,” Glaser said. “I don’t think that this is a crisis. It is a serious situation, we are taking it seriously and I am confident that we will come out the other end and be fine, but it is our responsibility to make sure that this gets fixed.”